Councilors: $13M price tag sticking point for lot

Building W. Maui beachfront parkway an ongoing initiative

September 4, 2013

WAILUKU - While all Maui County Council members agreed that acquiring 186 acres at Launiupoko in West Maui would be a boon for the community, some members expressed concern with the proposed deal's $13 million price tag.

"This is a project that's been ongoing for decades.

The project was originally part of the pali to Puamana purchase where we were trying to create a coastal

Article Photos

Sunlight sparkles Tuesday afternoon on the ocean off Launiupoko in West Maui. Mayor Alan Arakawa sought support earlier from the Maui County Council’s Budget and Finance Committee to purchase 186 acres at Launiupoko for $13 million. Committee members expressed support for the deal but deferred action to look more carefully at details of the proposed purchase price.The Maui News / BRIAN PERRY photo

parks system to preserve scenic view planes and stop housing development along the ocean," Mayor Alan Arakawa told Budget and Finance Committee members Tuesday.

The dream of building a beachfront parkway along West Maui's coastline from the pali to Puamana has been one of the mayor's ongoing initiatives. In 2006, nearing the end of Arakawa's previous four-year term as mayor, the county acquired 100 acres in Ukumehame for $4 million from private landowners to start the parkway.

The current deal was forwarded to the County Council earlier this year. It proposes to acquire 148 acres from the northern edge of the former Olowalu Landfill to Launiupoko Beach Park, and 37 acres from Launiupoko to Puamana Beach Park.

"This is a project I've been really pushy on, if I were to rate between one and 100 of things I want to see accomplished, this is 100," Arakawa said. "A lot of areas in Makena and Wailea, you can't even get to the beach because we've allowed construction to go right up to the oceanfront. This (Pali to Puamana parkway) concept was to be able to preserve this for the community for a long time."

"The opportunity to make one continuous park like this won't ever happen again, at these prices," he said. "This is a real bargain at $13 million, already $7 million less than what we would've been able to acquire it for years ago."

The mayor said the land was originally valued at around $20 million. A land planning consultant for the deal later cited a 2006 private appraisal, in which a local land trust listed the value of 363 acres in the area at $24 million.

While this may seem like $11 million in savings, as the mayor suggested, the price per acre costs more in the current deal than what it was in the 2006 appraisal, committee Chairman Mike White pointed out at the meeting. By White's calculations, the 2006 appraisal to which he believes the mayor was referring to comes out to about $66,000 per acre. The deal on the table now - $13 million for 183 acres - comes out to about $71,000 per acre.

"I am totally supportive of the measure as it stands," White said. "This is a very important purchase for the county, to preserve the openness to the sea, which we've unfortunately lost in Wailea. This is an item I think we need to move on . . . but we've got our own due diligence to entertain."

White suggested that the committee look more closely at the appraisal to see if the $13 million price tag for the land acquisition is "completely valid." He cited concerns that the appraisal may have overestimated the value of the land by not calculating decreased value of two lots that were bifurcated by the highway, the value of one lot that was deemed "nondevelopable," depreciated assessed land value and traditionally cheaper prices for large lot acquisitions.

The appraisal currently estimates the land's value by breaking it up into eight parcels and adding the total value of each parcel, which would typically cost more than if the entire lot were sold as one large lot, White said.

"I want to move this forward, but I also want to be fair to the taxpayers and do a good job by looking at how this appraisal was done, and what the impact would be if it were done as a large lot," White said.

Steve Goodfellow, one of several landowners with Makila Land Co. LLC, said the agreed-upon $13 million is already a lowered price. He and other landowners have already been negotiating with the mayor's administration for more than a year, and both sides had originally settled on a $16 million price quote.

However, after the appraisal report submitted last November valued the property at $13 million, the landowner agreed to reduce the price.

"Real estate values have gone up considerably over the last 12 months," Goodfellow told the committee. "I think this property is worth more money, but . . . we've been wanting to see the whole Pali to Puamana vision come to reality for a long time."

He added that over the years since the land was first acquired, Makila Land has spent millions on this portion of land, working on drafts to develop the alternate roadway, a drinking water and irrigation system, various infrastructure and the state-required environmental assessment.

Though the county was able to acquire the Ukumehame property in 2006 for significantly less money - $4 million for 100 acres, or about $40,000 per acre - the Launiupoko land "is not comparable," according to Makila Land planning consultant Rory Frampton.

The Ukumehame property had portions of wetland, issues with title and ownership, obstructed views and a flat topography that limited ocean views and decreased potential real estate values, Frampton said.

Council Members Don Couch, Mike Victorino and Council Chairwoman Gladys Baisa advocated the committee take action on this "once-in-a-lifetime" opportunity.

"I appreciate chair's tight-fistedness with our money . . . but we have to be very careful what we wish for," Couch said. "If we get another appraisal and it comes out at a higher value than it is now, the landowner can kick up the price. Sometimes we can research something to death, and it'll end up costing us more than what it would've if we just bought it now."

Goodfellow confirmed that if the county ordered another appraisal, which valued the land at a higher price, Makila Land would likely ask for the appraisal value.

"I personally would like to get control of that land all around that scenic highway, it is so special," Baisa said. "It's very important we try to preserve it

. . . I'm afraid if we don't grab it soon we might lose it."

"We've waited so long, and we've had different prices. I think for $13 million we're getting a heck of a deal at this time," Victorino said. "We should act as soon as possible."

Victorino called the deal "a once-in-a-lifetime opportunity" that should be seized before the landowner opts to parcel out the property and sell the lots to different owners.

The original deal negotiated between Makila Land and Arakawa's administration expired in March, but was extended to Dec. 31. White said he was confident that a resolution would be reached by then.

While no action was taken on Tuesday, White said council members would continue discussion on the Launiupoko land acquisition at the committee's next meeting, which has yet to be scheduled.